I attended the BarCamp Bank London Tomorrow’s Transactions “Unconference” at the UK National Endowment for Science, Technology and the Arts in London on February 10 and got an up-close view at the future of digital money.
The Unconference concept has been around for several years now and is an interactive and participant-driven format, an ideal setting for discussing financial services innovation and the evolution of traditional models of banking. The 70-plus attendees worked collaboratively on topics such as Bitcoin and alternative currencies, mobile money, financial inclusions and identity and anonymity in the new economy.
Introducing the collaborative sessions, digital money expert Dave Birch of ConsultHyperion offered thoughts on the evolution of payments and related money services. He noted that some of the “innovations” for which the financial services industry is known, such as the ATM, debit cards and the money market account, now are more than 30 years old.
Significant change is now afoot however, as technology has driven a move away from traditional branch banking and disrupted the banks’ grip on movement of money.
Birch observed a number of concrete changes taking place in the payments ecosystem:
- The evolution of the payments function from “pull” to “push” (whereby the customer sends out money from her account, rather than having it withdrawn), both for peer-to-peer payments and conventional retail transactions. Players in this space include Square in the U.S. and Zapp and PingIt in the UK.
- The emergence of non-banks (such as T-Mobile in the US) performing the bank-like function of storing value, typically via prepaid cards.
- The numbers of countless ‘near banks’ offering pre-paid accounts and associated debit cards. These accounts look and feel like a bank account.
- The rise of tech intermediaries such as Facebook, Google and Apple with oodles of customer information who are thinking seriously (i.e. unconstrained by current bank models) about the future of money and payments.
One of the questions the new financial services industry players and companies like Google are thinking about is the nature of mobile banking itself. Is mobile simply a new channel for offering the same boring bank products, or does it offer the potential of a radically new customer experience, i.e. delivering the 21st century equivalent of a branch offering a full range of services but contained within the phone?
Another even broader question stretches to the ultimate role of the bank itself. Might banks (and consumers) be better served by drawing back from serving consumers directly, instead focusing on the back-end areas such as processing transactions, for which they have the technology and skill? Third party providers could then focus on delivering the customer experience via apps and other virtual (or even physical) channels. Would the customer experience suffer or improve? It’s a question worth considering.